From December, the new RICS Home Survey Standard will become mandatory for all RICS professionals undertaking home surveys.
The below article explains its ambitions and how it will better protect buyers and sellers.
Buyers are confused and not getting the advice they need
It’s been known for some time that many home buyers are confused about home surveys. And that’s not surprising. On average, it’s something that they only decide on every 15 years or so when they move home.
And their advisors, such as their conveyancer or the estate agent, are not much clearer either. As a result, there is anecdotal evidence that as few as one in five home buyers have a separate condition survey on the property they’re considering buying.
This means that 80% are buying the biggest purchase of their lives without having a professional assessment of the issues they need to be aware of that might affect their enjoyment of the property.
Are current RICS home survey products fit for the future?
Currently, RICS surveyors use three types of home survey: a Condition Report (the most basic); a Home Buyers Report (which is the most popular and can be produced with or without a valuation); and a Building Survey (the most comprehensive report of its kind and used for larger or older properties or when planning major works).
Each report type has its own set of RICS standards, with coherence between them suffering.
The names of each survey type have also not made it intuitive as to what each survey type covers. All of them are condition reports, all are largely targeted at home buyers, and all are surveys on buildings! It’s no wonder the consumer is confused.
What is the new Home Survey Standard (HSS) and what will it achieve?
The HSS is a single standard for condition-based home surveys and will be mandatory for all RICS surveyors to conform to from December 1 2020.
It replaces all previous guidance notes and statements for all levels of condition survey in a complete overhaul. Its ambitions are to:
• Help explain the benefits of surveys to buyers
• Help them choose the right survey for them
• Use simplified language
• Keep everything coherent within a single set of standards
• Provide a flexible framework so that surveyors can develop their own bespoke survey format and innovate
• Encourage surveyors to tailor reports according to the property and the client requirements
Levels of service – 1, 2 or 3
Probably the most important concept within the new Standard is that surveyors must ensure their service is clearly benchmarked against one of the defined levels and made clear to the client.
These levels are 1, 2 or 3. As you might expect, as you move up the 3 levels, there is a greater level of inspection and a more detailed advice report
An insight into the new levels
Level 1 is designed for clients seeking an objective report on the condition of a property at an economic price. What you need to know about a level 1 survey:
• Based on a visual inspection
• No tests of the fabric or services are undertaken
• Identifies each element of the building, services and grounds and reports on its condition
• Highlights relevant legal issues, and any obvious risks to the building, people or grounds
• It’s a succinct report. Where a surveyor is unable to reach a conclusion with reasonable confidence, a recommendation for further investigation is made. But these should still be limited since this report should only be used on simple properties
• It does not include advice on repairs or ongoing maintenance
Therefore, it’s only suitable for conventionally built modern dwellings, showing no signs of being in bad condition. A level 1 won’t suit older properties, more complex properties, or those in a neglected condition.
On the other end of the scale, level 3 is designed for clients seeking a thorough professional opinion and covers:
• Much more extensive visual inspection – for instance, concealed areas are inspected if it is safe to do so – such as roof spaces and basements
• Building services, such as the heating boiler, are observed in normal operation
• Describes the form of construction and the materials used for different parts of the property
• Describes the condition and provides an assessment of the relative importance of the defect or problem found
• The scope of any remedial work required and explains the consequence of non-repair
• Make recommendations on the priority and likely timescale
• At level 3, referrals for further specialist surveys should be minimal, even on complex properties. If a surveyor produces a level 3 report with half a dozen recommendations for further specialist surveys, then they shouldn’t have attempted to undertake a level 3 report. The surveyor is not competent to do that detailed survey on that complexity of property
• A level 3 report won’t give as a matter of course an indication of likely cost of repair. If a client wanted costs, these would be an additional item that should be reflected in the terms of engagement
A level 3 report should aim to provide the client with all the information they need to make a decision. This level of service will suit any residential property in any condition.
The levels are not totally prescriptive
The levels provide enough detail to allow the minimum nature of the service to be identified whilst maintaining enough flexibility for RICS surveyors to respond to changes in the market and client requirements.
Some may argue that there is an inherent contradiction in this requirement. Flexibility will mean that one level 2 report will not necessarily have the same scope as another level 2 report, even on the same property.
The level of each report must be made very clear to the client and incorporated within the terms of engagement letter, and these terms must also explain any aspects of the survey that deviate from the standard level.
Talking to the client and understanding their needs will be crucial
To create fantastic reports that meet the client’s needs, the surveyor will need to understand both the client as well as the property in advance of recommending the most appropriate level of report.
Surveyors will need to tap into why the client is buying. How do they wish to use the house, and what are their aspirations for the future?
For example, is the client looking to move their elderly parents into the property in two years’ time and build an extension on the back? That would be essential to know so that the scope of the report covers the necessary advice.
Choosing the right surveyor for the right survey
Another crucial requirement for the new Standards to deliver the benefits hoped for is that surveyors must be able to identify their own limitations.
They must decline the instruction if the complexity of the property or the level of service is beyond their knowledge and skill level.
This is the single most important thing to get right if we are to rid survey reports of unnecessarily recommending additional specialist surveys – something we know is frustrating for sellers and buyers alike.
The RICS Home Survey Standard should be the catalyst to drive a higher quality of service and deliver trust in the home survey market across the UK.
Surveyors will need to up their game so that the value of their expertise can really help the buying and selling of homes.
*Austin Baggett CEng FRICS is managing director of Sava, which provides RICS and CABE accredited qualifications to those wanting to enter the residential surveying and valuation profession.